Could Sakong Take the IMF Job?

Sakong Il, chairman of the Korea International Trade Association and a potential candidate for head of the IMF, has been the face of the Korean economy to foreigners for many years.

Ask any prominent policymaker, think-tanker or professional economist in Washington who they think of first when they want to know what’s going on in the South Korean economy and most will respond with one name: Sakong Il.

So it’s no surprise that his name is being tossed around as one of the potential successors to International Monetary Fund managing director Dominique Strauss-Kahn, who resigned yesterday after being charged with sexual assault in New York earlier this week.

Mr. Sakong is currently the chairman of the Korea International Trade Association but he spent last year in the limelight as the head of the presidential committee that put together the G-20 Summit in November, one of the biggest diplomatic events South Korea has ever hosted. (And definitely one of the most hyped.)

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In the months leading up to that event, Mr. Sakong lobbied for the establishment of a secretariat for the G-20, giving the ad hoc group an office and bureaucracy that would raise its influence on existing global financial institutions like the IMF. So far, the G-20 nations have resisted.

Mr. Sakong was South Korea’s finance minister in 1987-88, its first under a democratically-elected president. He went to the U.S. in the early 1990s and wrote a study called “Korea in the World Economy” that helped cement his reputation in Washington as one of the public faces of South Korean economy.

Our Beijing-based colleague Bob Davis reached Mr. Sakong in London yesterday to talk about the selection process for the next IMF chief.

Mr. Sakong told Mr. Davis that the selection should be “merit based” and not dependent on the home country of the candidate. Several prominent Asian finance leaders have made the same point this week. By tradition, the top IMF job is reserved for a European and French Finance Minister Christine Lagarde is considered the top European candidate.

Mr. Sakong also noted that several reforms of the IMF, including increasing the voting quota of some under-represented economic powers, were approved at the Seoul G-20 summit last November. “It’s time to follow through on what’s been promised,” Mr. Sakong said. “I think the global community is watching.”

Mr. Sakong said he was “honored” to be considered a candidate but said it would “too presumptuous” for him to say how he would propose to run the IMF. “I should be humble and just be very much honored” to be mentioned as a candidate, he said.

One strike against Mr. Sakong is that he is 71 years old. IMF rules say that a managing director must be younger than 65 when he starts his first term and must retire at 70. Those rules can be changed, of course.

Another strike is harder to quantify but it’s certain to weigh on the minds of officials in other countries: the antagonism and resentment South Korea has shown toward the IMF since it was forced to accept a bailout from the fund during a financial crisis in 1997.

South Korea repaid the $60 billion IMF-led loan in less than a year and the economy had recovered from the crisis by 2000. But the shock, embarrassment and pain of that crisis was so great that South Koreans ever since have called it the “IMF Crisis” rather than referring to the reasons it happened.

Last July, the South Korean finance ministry and the IMF co-hosted an event in Daejeon to try to restore the IMF’s reputation here. But the stigma of IMF help is so great here and elsewhere that South Korea has been leading an effort in the G-20 to develop other ways to help countries that hit financial trouble.

One of our favorite Korean reporters, Cho Jin-seo of the Korea Times, reminded us today of the exchange he had with Mr. Strauss-Kahn during a news conference at that image-boosting event in Daejeon last July.

Mr. Cho asked Mr. Strauss-Kahn whether he thought his successor could come from an Asian country.

Mr. Strauss-Kahn replied, “I want a sign of change that the person who follows me in the position will come from an emerging or low-income country. The problem is that I intend to stay for the next 20 years in this position.”

Mr. Cho later encountered Mr. Strauss-Kahn in a bathroom and the managing director joked with him: “Are you interested in this job?” Mr. Cho replied, “Certainly, why not?”